Basel Committee to Revise Crypto Capital Rules After US and UK Pushback

The Basel Committee on Banking Supervision is preparing to revise its stringent crypto capital rules following opposition from the United States and United Kingdom, signaling a potential shift in global banking regulations for digital assets. Erik Thedéen, chair of the committee, confirmed in an interview with the Financial Times that internal discussions are underway to reconsider the 1,250% risk weighting applied to crypto exposures, which requires banks to hold capital equal to their crypto asset holdings.

The US Federal Reserve has explicitly rejected the current framework, deeming the capital charges unrealistic and discouraging for bank participation in stablecoin and crypto markets. Similarly, the Bank of England will not enforce the rules in their present form, citing concerns over stifling innovation in regulated stablecoins and tokenized deposits. Thedéen acknowledged that the rapid growth of regulated stablecoins like USDT and USDC has dramatically altered the policy landscape, necessitating a quicker, more nuanced approach.

The European Union has only partially implemented the 2022 Basel standards, excluding provisions related to permissionless blockchains. This divergence, coupled with the passage of the GENIUS Act in the US formalizing stablecoin use in payments, highlights a widening split among global regulators. Thedéen noted, "There are so many different views in this committee," emphasizing the challenges in maintaining consensus. Revisions are expected to be published next year, focusing on a more bank-friendly framework that reflects evolving market conditions.